What is Bitcoin? A Complete Guide for Beginners

You must have heard about Bitcoins, your mind is going crazy with all it has performed since its existence and fail to get the exact information about this virtual currency. It’s time to release your stress as this tutorial article will provide you all the necessary information about What is Bitcoin? The information will be starting from its existence, exploring the magic of this virtual currency, how the world is reacting with its growth, steps of investments, scams to be avoided and more importantly earning good money. For those who think it to be fake currency module than they should keep in mind that you can sell or buy a Bitcoin with American and Canadian Dollars. Not controlled by any Government but still, it has earned great respect and faith in the financial markets across the globe.

What is Bitcoin? A Complete Guide for Beginners:

Introductory Analysis: What is Bitcoin?

Since the creation of this ideology named Bitcoin the Virtual Currency aka Cryptocurrency, it has gone literally very far then the expert’s expectations. There are world famed brands which either deal in this currency or promote the use of the same at a larger scale. Still, countries like China and Russia are trying to impose a complete ban on the use of this kind of virtual money. This situation also makes it varied and curious for the readers to get an answer to the question What is Bitcoin?

Brands like REEDs Jewelry, US, privatized hospitals at Poland and even the Billionaire business moguls like Microsoft, Dell, Expedia and PayPal, they all openly support and willingly transact with this super currency. This platform comes with news publications like Bitcoin Magazine which cover the necessary information like price index, exchange rates, forums etc. What exactly is the fuss that created a war on its acceptance and declination in operating such systems? This whole scenario is a bit confusing yet out of the ordinary on the other hand.

As per the bygone times, The Wall Street indicted all the big banks for misusing the with the customer’s money, deceiving their clients, chaining the system and charging all the unnecessary fees. Here, the need aroused to track down the corruption, terminating the middleman, revoking the interest rates and making all the financial transactions transparent. The masterminds behind the Bitcoin created such decentralized system to manage and control your funds and more importantly to know what exactly is going on. Moreover, these problems highly included hacking the accounts, unmanaged stability and the delay in important transactions. Digging about what is bitcoin, it is now proved to be a better system for the transaction of your financial needs.

Complete Information about What is Bitcoins?

In the year 2008 and on 18th of August the Bitcoin.org was successfully registered. Following that November Satoshi Nakamoto published a paper link with title naming as Bitcoin: A Peer-to-Peer electronic cash System. Satoshi released the Bitcoin system in January 2009 as an open source code and surprisingly the creator’s identity is still unknown in the records. At this time Satoshi successfully mined the first ever block-chain infamous as genesis block with a reward of 50 Bitcoins.

Hal Finney a programmer who downloaded this software on its release date and earned 10 bitcoins from this system. This was the first ever Bitcoin transaction made by Satoshi. With the passage of time, you all know about the current status of the Bitcoin System and the current value of 1 Bitcoin is estimated nearly $14550.00.

Satoshi simply finds out a simpler yet better way which makes it possible for the two individuals or organizations to conduct trade without the interference of other mediators. The main key magic is sheer MATHEMATICS which will deliberately answer your question on What is Bitcoin? Math plays the major role in the successful running of the Bitcoin System. Feel free to transact or conduct business with cryptocurrencies till you have faith in mathematical coding and configurations.

Overall this system used the cryptography system and helps you in achieving the balance verification, multiple spending restrictions, asset and record maintenance and moreover authorization. All this stuff happens instantly in real time that also with zero additional costs, unlike the banking systems. Here, you require a private key for performing transactions and the cryptosystem makes you authorized. The key is so powerful that no system on this planet can predict or crack it. In simple words, the Bitcoin System is un-hackable (impossible in hacking)

The Bitcoin system compiles with the virtual financial system or a technological miracle. Earlier you have made transactions either by wire transfers, cash or cheque. but now, one can use Bitcoins to sell or buy goods or services like the controlled currency in your back pockets. Simplifying what is Bitcoin, it is just like a file sharing system like Skype, Whatsapp where the necessary information which is entirely secure runs on the peer-to-peer computing networks across the globe. The lengthy security code solves the purpose of your signature and the receiver decodes it to avail the cryptocurrency in his/her wallet.

How does the Bitcoin system work?

At the layman’s level Bitcoin is simply a digitalized ledger or a file which contains the information about names and financial balances. In this system, people tend to exchange their money by changing this file. As per a simple example, if A sells a cycle to B for 5 Bitcoins, the balance of A raises up by 5 Bitcoins and the balance of B reduces by 5 Bitcoins. Simple transactional mathematics!

There is no role with the governmental issued money or the gold with the Bitcoin system. In the above example, A is willing to sell the cycle with the higher number in this digital file or ledger and this all comes with a faith that other people will also rely on this system. The question comes who on this earth maintains such financial system? Moreover, that management also controls and manages to avoid cheats and thefts.

One of the major goals of the Bitcoin is on avoiding the all the federal control and enables every single participant to run and maintain his/her own file or ledger. Another surprising fact with the Bitcoin system is that everyone can see everyone balance sheets or ledgers. On contrary other financial systems uses account numbers rather than names so there is a level of obscurity in it. If people self-manage their digital files or ledgers, then how these information’s are synced with money transactions.

Explaining this process at the basic level, if you want to transfer or send money through the Bitcoin system, this information is broadcasted to everyone in the system which includes your account number, receivers detail and the amount you need to transfer. All the participants in this system update their ledger and avail this information instantly. Even if you fail to maintain your file or ledger still one can make transactions.

On managing the thefts like in all the financial systems it’s hard to manage when someone tries to spend your money by using your account number. With respect to Bitcoin system, it uses a signature similar to your signatures in the banking systems. This method is required to prove the authenticity of the account holder who is willing to transfer some amount. Here, interestingly Bitcoin uses a mathematical code rather than a human signature. When a person creates a new account, then he/she receives a mathematical key which is specifically made and linked to the account number. You must be familiar with the Bitcoin wallets and this wholly allows you in creating such signatures.

How is this key made?

To create a special signature for the transaction, a confidential key and text from the transaction are forwarded into a cryptography function. On another hand an additional function allows the connected people to verify or check this crypto signature and this assures to be a genuine transaction from the account holder. This process in the Bitcoin system is applicable to every specific transaction. Moreover, as the written signature this crypto signature cannot be copied or reused for the future transactions as they are inimitable with every single transaction.

Bitcoin Transactional Properties and Abilities:

Irretrievable: Once either mistakenly or willingly anyone confirms the transaction, it cannot be reversed. Nobody and sincerely no one in this entire world can stop that transaction. Neither the hackers nor the US President and not even Satoshi himself can assist you in this situation. The money send means it’s sent, that’s clear and simple. Here, no one can help you out if you send the money to a scammer or any hacker makes the theft attempt on your computer. There are no such precautions for this Bitcoin Transactional properties and abilities.

Fictitious: What is Bitcoin and what makes it Fictitious? Now, all the transactions and bitcoin accounts have no connection to the real world identities or persons. You get the money or coins specifically Bitcoins on your address via the number chains of 30 characters. One has the option to study or analyze the coin flow but it’s entirely impossible to connect it with a real-world identity with the users through those addresses.

Quick and cosmic: if you compare the speed of light it still takes minutes to reach earth but in Bitcoin system, the transactions are quite instant and moreover they are confirmed quickly. The transaction process entirely happens in the cosmic network of computers and they have no concern about the physical location of the coin holder. This is another remarkable Bitcoin Transactional properties and abilities.Now, either you send money to the person sitting next to you or on the other side of the world he/she will receive it instantly.

Secure and Safe: The Bitcoin system runs with a crypto protection or locking system. What is Bitcoin and how secure it is, here’s your answer as only the owner of the Bitcoin holds the private key to transfer the cryptocurrency. Mathematics is the main logic behind its strength and these big numbers make it impossible to hack this system. In comparison to the safety measures, the Bitcoin is far more secure than the Fort Knox.

No Permissions: If you are Bitcoin owner then there is no permission required to ask anyone to use this cryptocurrency. Unlike other software, you can download this for free in your systems. On successful installation, you can freely receive or send the Bitcoins and even other popular cryptocurrencies. But the issues arise that no one will come to protect you and there is no gatekeeper in this system.

Where to get Bitcoins? A Complete Guide for Beginners:

As per experts reviews and statements, there are best four ways suggestions to get Bitcoin in your wallet. This beginner’s guide provides you with all the necessary information about Where to get bitcoins. Starting from its ideology of creation and how it’s ruling the virtual financial system globally.

Four possible and suggested ways to get Bitcoins:

The cryptocurrency exchange: This is the most trusted way where you can exchange your money with Bitcoins or even for Satoshi’s which is the smallest unit or simply cents for better understanding. Best exchange forums like Local Bitcoins and the Coinbase in America and Canada. In the United Kingdom, you have Bittylicious and Bitbargain.

At Bitcoin ATM: Unlike other ATM machines for quick transfer and cash in hand, similarly, you have Bitcoin ATM’s for the cryptocurrency which entirely solves the puzzle as to where to get bitcoins. They are not available yet like other ATM machines by the roadside but who knows about future. The best you can avail such opportunity with Coincorner and BTER.

Bitcoin Dealers: Organizations or service which can appoint you with a seller or help you in trading in the Bitcoin system by exchanging your cash. There are certain fraud firms to beware of and it’s vital to be cautious in such situations. Local Bitcoins website will provide you with decent knowledge in such conditions.

Dealing for Bitcoins: No matter in what business you are engaged with. Either you cook for a living or sell grocery or you are a real estate mogul. Try to make a deal in Bitcoins. Such options can make you earn and reserve Bitcoins in your wallet. You can search for such customers who deal with cryptocurrency and get yourself paid with the virtual currency.

Strict warning or alerts for our beloved readers: Scams and thefts are highly active in the name of Bitcoin system. So, before engaging with any of these above systems or services it’s vital to check the reviews of the customers who have already engaged. Moreover, you can sensibly quote your queries on the Bitcoin Forum. They will surely assist you with your questions as to where to get bitcoins.

How to store your Bitcoins? A Complete Guide for Beginners:

Bitcoin is not like the paper currency which you can hold and lack it in your safe box. It is a virtual currency which you can store in your virtual Bitcoin Wallet. You just need to sign up with your crypto currency wallet. The Bitcoin wallet stores all your coin and transactional database. As per the research data analysis, there are only three different applications which assist on how to store your Bitcoins.

Full Client storing application: This application is strictly not for the beginners! It is like that email server whose processes are not linked with any third party server. The user has to control all of the transactions from beginning till the end like a self-governing system.

Lightweight client application: It is a separate email client which joins through a mail server for the accessing to a mailbox. This system will store your Bitcoins but here, you need a third party owned a server for the network assessment or to make a transaction.

Web client applications: This system is entirely contrary to the Full client application which answers your question of how to store your bitcoins. It relies completely on a third party server and here the third party server operates your entire transactions.

Important! There are only five possible ways to get wallets and they are mobile, desktop, web, hardware & paper. All of these are easily accessible with their respective advantages and disadvantages.

How to buy and sell your Bitcoins? A Complete Guide for Beginners

Like the way you have the controlled money which can be easily traced and stored, Bitcoins have no such physical traces. It is only maintained in records with respect to your transactions and the information about the sender and receiver. The increase and decrease in their balances are automatically managed in this online ledger. Let me depict it with a perfect example describing how to buy and sell with bitcoins.

Featured example of a Bitcoin Transaction:

Our Mr. A is heading to buy a burger from Miss. B, who is the retailer. Here, to get the amount paid, A sends the private key with the transaction amount to B. This includes the information of mathematical sequence numbers, source transaction of the coins, amount and B’s wallet address. Here, B scans the key with her device in order to decode it. Like other transactions happening around the globe, this transaction will also broadcast in the Bitcoin system. After few minutes the transaction is confirmed with respect to the business and technical rules governing how to buy and sell with bitcoins. Through this mining process, B gets a score and allows her to proceed with the transaction or not.

What is Bitcoin Mining? A Complete Guide for Beginners:

It is just another process through which you’re every transaction in the Bitcoin system is verified and added to the ledger popular as blockchain. Any person with an active account and a suitable supportive device can perform the Bitcoin mining process. Overall it’s an open participation for every user. This process includes solving the transactions in a blockchain and managing with the computing puzzles.

Miners can generate new Bitcoin by using specific software which helps in solving the cryptographic problems. This is indeed a smarter system to mine out crypto currency and to avail incentives. The user which solves the puzzle places the next block in the blockchain and is applicable to claim the reward. Every reward is approved by every user in the crypto network and it is generally 12.5 Bitcoin in addition to the fee paid by the user. To control Bitcoin inflation and for better system management the amount of Bitcoins is fixed for circulation and it is 21 million Bitcoins until the year 2040. This controlled number and management make it even tougher to solve the puzzles like bitcoin mining.

How to protect your Bitcoins?

Bitcoin system is totally secured with the mathematical and cryptography but smart minds may still try their tricks to hack you your system and human errors and trusts lead to scams. Those precaution measures are meant to be kept for the future safety of your Bitcoins. Here, you get four special pieces of advice how to protect your Bitcoins. Likewise, you save your real money by keeping it at different places and a limited amount in your wallet, the similar way you can store small amounts in your mobile, computers and even at other servers as per your daily requirements. Try to keep the left part at some secure ID or wallet.

Always try to use a secure system or try to back up your wallet regularly. Manage your wallet or the device with a strong password to keep it safe from unnecessary thefts. (Well this is not with the numerical key generated by the Bitcoin system)

Offline wallets can help you in securing your virtual currency asset. now, how to protect your Bitcoins, think it similar to the bank and keep only the necessary amount with you in your active Bitcoin Wallet.

Regularly update your wallet like you do with your other electronic devices. This will help you keep an eagles eye on every transaction is made in the system.

For multi- protection system, always use the Bitcoin signature feature that allows you to safe transactions with self-governing.

Other necessary Information about Bitcoin:

Protection of Account: The Bitcoin system is now an open source which allows people in this system to peep into your transactions and it is necessary to learn about how to protect your Bitcoins. There is no doubt that your uniqueness is disclosed behind the address but the system is such that allows public through the computing network to get through your Bitcoin balance and a complete log of transactions. It is one of the main reasons which make it vital to change your Bitcoin address after each and every transaction you have made just to protect your address. Another thing you can do is that you can do is apply for multiple wallets and manage it properly to secure your transaction history and make your logs private.

The Confirmation score: There are various secure wallets which properly manage your cryptocurrency. One receives this score before you follow a transaction or a purchase. Every wallet has its own readings and it becomes important to go through them every single time.

Federal Rules and Regulations: Every single Government has its own norms and conditions with respect to the capital gains, taxes, salaries, profits and other income sources but now Bitcoin is also included in most of the countries. But the legal terms and conditions also vary from country to country and in some of the regions, it is properly banned. Even these regulations vary from state to state. As a matter of fact, New York State is the only single state which has specifically issued the Bitcoin rule and is termed as BitLicense. As per the confirmation score discussed above, you have to better check the reliability with the every transfer score.

Advantages of Bitcoin system:

Unlike the circulation of the controlled money around the world, Bitcoin system provides you with a decentralized financial system. As per the Advantages of Bitcoin system, these properties allow you to conduct business or transact money in any part of the world without any extra charges and exchange rates. This virtual financial system does not come under the financial reserve system followed in every country and there is no such interference of them. The transaction system is made transparent and you can check, manages even the oldest transaction made through your computer. This opportunity will make you exactly what is happening with your money. There are no investments, charges and you can start investing in Bitcoins by just downloading this software on your computer. The cryptocurrency system cannot be forged or hacked as it is powered by the cryptographic codes and keys which are used only once in the deals you make. Mathematics is the main key which makes this system more secure and un-hackable.

Disadvantages with Bitcoin System:

Bitcoin is now the topic of the heat with every single person searching it on Google million times in a month. This is due to its increasing value in comparison to the controlled financial system. But the point of fiction is that no one knows anything about Satoshi Nakamoto, the person who himself is the creator of the Bitcoin System is unavailable and never been traced to date. Strange but true!!

As per other weaknesses hacking and scams are off the charts these days. These processes or scams are the main Bitcoin disadvantages. Every single hour one or the other person gets stuck in a Bitcoin scam. Even most of the users have reported in slow transactions and they have to wait for at least hours to get confirmed with the transactions they have made. Now, either it’s the system fault or an internet issue but this is frustrating for every user.

Scams are the major disadvantage of the Bitcoin system. People are unaware of the virtual currency and get themselves involved in one or the other scam. They are virtually misled by the hackers on the name of Bitcoin Mining and this leads to huge losses and decreases the trust in this virtual financial system. Despite its super powerful cryptosystem and un-hackable properties, the hackers have created decent ways to fool the people with tricks and tactics. Some of them are listed below and surely help you in getting safe and secure.

There are four stated ways which can lead to Bitcoin disadvantages and scams. These are mining scams, Wallet scams, exchange frauds and alluring schemes (Ponzi schemes).

Mining Scams: There are loads of companies available which claim to provide you crypto currency through Bitcoin mining process. All you have to pay a certain amount for this process and in most of the cases these firms tend to be bogus with these processes. It can be the last time for you to see that money with no Bitcoins in your hands.

Wallet Scams: Reports have been featured online with frauds like Wallet scams. Here, you are unable to dodge a complaint under such scams. This scam is similar to other wallet scams. The robbers or hackers will ask money to transfer Bitcoins in your wallet. Most of the time people get stuck in such scams and forward the desirable amount to convert it into Bitcoins. It is one of the major bitcoin disadvantages which makes people stuck in such scams and hacks. But the end results are all in vain and you won’t get anything from this business deal.

Exchange scams: Every exchange offers special features and conditions and this is something similar to the Bitcoin Exchange. Here, you can have cryptocurrency in return for the cash in hand. But most of the hackers manage to create a fraud in these scenarios and they make you remain still while wiping up all your cash with no Bitcoins in your hand.

Ponzi Scams: these cases are referred with high payment deals when the hackers offer you with a huge interest rate with respect the amount you will provide them. These firms manage to keep different names which keep them off the radar and people easily get stuck in such scams. It’s advisable to get rid of such companies which offer you with the Bitcoin payments and it better to check out for 10 times before indulging in such business. Always rely on the trustworthy dealers or ask the Bitcoin Forum to provide a better solution with investments.